MR. CROWLEY: Good afternoon. We thought we would have two senior
administration officials come give you a bit of the story behind the
story on today's meetings between the Portuguese leaders and President
Clinton. Senior official number one from the National Security Council,
and senior official number two from the National Economic Council, but
we'll do this ON BACKGROUND attributable to senior administration
officials.

Senior administration official number one.

SENIOR ADMINISTRATION OFFICIAL: Thank you, Mr. Crowley. I like to
say Mister; I used to have to say Colonel. I thought what I would do is
just run you quickly through the meetings the President had with
President Sampaio and with Prime Minister Guterres. And my colleague
will focus on the economic aspects of both meetings. Let me run you
mostly through the foreign policy issues that were covered.

The President first met with President Sampaio in a restricted
meeting. Also present were Secretary Albright, Sandy Berger, Ambassador
McGowan and Steve Ricchetti. President Sampaio began with a very
eloquent review of recent Portuguese history, the last 26 years that
have taken Portugal from a dictatorship to democracy, from a relatively
backward country to one that's prosperous, from a country that was
isolated to one that's very much engaged in the world.

I think the President was very struck by this review of recent
history. He was struck by one of the facts that President Sampaio
relayed to him. President Sampaio said that when he was a young man, 30
or so years ago, about 30,000 Portuguese were in the university system.
Today, with the same population base, 400,000 Portuguese are in the
university system. The President was very struck by this.

They talked about Portugal's increasing international engagement in
East Timor and the Balkans and other places around the world. They
focused some of their discussion on East Timor, in particular the need
to engage the East Timorese in the reconstruction effort, and also the
need to deal with the problem of refugees in West Timor. They also
talked at some length about Angola, and also about the European Union's
own evolution and the very important process it was going through in
enlarging. And the President reiterated his strong and very consistent
support for E.U. enlargement, and also for the E.U. more generally and
the European Monetary Union.

And the President also talked about his hope and desire to engage
in another WTO round starting this year, and my colleague can talk more
about that. With Prime Minister Guterres, the President began in a
restricted session again with Sandy Berger, Secretary Albright,
Ambassador McGowan, Steve Ricchetti on the American side. The Prime
Minister began by relaying his recent trip to Russia. He was just
there, as I think you know, on the weekend in his capacity as the
President of the European Union. They talked at some length about the
trip. I don't want to go into too much detail about what the Prime
Minister said, but he did focus on a number of particular issues that he
discussed with President Putin; in particular, of national missile
defense, Chechnya and economic reform in Russia.

They talked about the Balkans at some length, as well. Both agreed
strongly on the need to have Russia very much engaged in the process in
the Balkans; the need to work with the opposition in Serbia; also to
enforce sanctions against Serbia; and, in particular, to get the quick
start projects that are part of the stability pact up and running very
quickly.

The President thanked Prime Minister Guterres for the terrific
cooperation we've had with Portugal, particularly with regard to the
Lajes Air Base. He thanked him for renewing the base agreement. They
discussed at some length, also, East Timor. Prime Minister Guterres was
recently there, he talked a little bit about his trip. And, again, they
focused on bringing the East Timorese more into the reconstruction
process and the administrative process.

They also talked about Angola. And the President described our own
efforts there with the bilateral consultative commission that's trying
to get the Angolans to engage in a peace process that focuses on
political reform and economic reform that reaches out to those members
of UNITA interested in making peace, that also focuses on enforcing
better U.N. sanctions and curbing the illegal diamond trade, which is
funding a lot of UNITA's activities.

They also touched on Sierra Leone. The larger conclusion, I think,
from this discussion was that they both agreed there is a need to do
even more to build up regional peacekeeping capacity in Africa and in
other hot spots around the world.

Finally, they took note of the agreements that were signed, or will
be signed today, between Portugal and the United States. I think there
are fact sheets that are either out or coming out on all of those. Let
me just briefly list them.

One is an agreement to cooperate on combatting Malaria in Sao Tome.
The President, at his event this afternoon, will focus more on that; an
Open Skies agreement that's very important, that my colleague can talk
about a little more; an agreement on child support -- this is on alimony
and child support recovery for Americans and Portuguese; and, finally, a
deportation protocol that's very important to the Portuguese.

And with that, let me turn it over to my colleague to run you
through the economic aspects of today's meetings.

SENIOR ADMINISTRATION OFFICIAL: The President and the Prime
Minister had fairly lengthy discussions, in particular, at lunch, about
some of the areas that are shared personal priorities for them, which
will be discussed further and elevated further at tomorrow's U.S.-E.U.
summit. In particular, in the area of cooperation on African
development, the Prime Minister referenced the E.U. African summit which
he had hosted earlier this year. As you know, that was an unprecedented
summit, and the President was extremely complimentary on the importance
of that summit for kicking off work in important areas and deepening
cooperation.

They talked about their shared commitment to development in Africa,
in particular through the debt relief initiative known as HIPC. Both
expressed the desire to see that work more smoothly, more quickly, to
ensure that reformers in Africa would be able to invest those important
funds in areas like education and health.

Secondly, the President noted the recent passage of the African
Growth and Opportunity Act as a key piece of our development agenda
towards Africa, and Prime Minister Guterres echoed how important
unilateral open market access is into the developed economies for
development in Africa.

And, finally, they talked at some length about their joint agenda
to address infectious diseases, in particular HIV/AIDS, tuberculosis and
malaria. As my colleague mentioned earlier, we are engaging in
bilateral cooperation with the Portuguese to eradicate malaria in Sao
Tome in particular, but at the U.S.-E.U. summit tomorrow, expect to have
a broader initiative that will very much carry forward to the G-8 and
hopefully, ultimately result in greater focus and greater resources
being directed at this health crisis.

The second area where they share a personal interest is in the area
of the new economy. There similarly, Prime Minister Guterres earlier
this year hosted what many refer to the "dot com summit," which for the
first time articulated a hard set of targets for the European Union to
achieve. He spoke of his own efforts within Portugal to hook up not
only every school and library, but also to get every home hooked up,
reaching out in particular to seniors, and the President spoke of his
own initiatives in this area. And they finally both spoke of the
importance of the government providing a sort of nurturing environment
for the private sector to develop high-speed interconnectiveness between
Europe and the United States going forward.

They also foreshadowed, both in those discussions and in the
discussions with President Sampaio some of the discussions on the trade
agenda that no doubt will also arise tomorrow, the importance in
particular of launching a WTO round. They were also referencing some of
the important outcomes that we're hoping for tomorrow in the area, for
instance, of data privacy, in the area of trademarks, the Madrid
Protocol, and third, in launching the Biotechnology Consultative Forum.

And, of course, we'll also expect that some of the areas where
there are some disputes, some frictions, will be raised tomorrow. Those
were less of an issue today, but in particular, the Foreign Sales
Corporation tax dispute, the Airbus subsidization issue and several of
the other trade areas where there are ongoing frictions.

Q The President expressed a little bit of optimism that there
might actually be some resolution to some of these issues, particularly
bananas and beef. Is that in the cards, or is it just going to be more
talk about --

SENIOR ADMINISTRATION OFFICIAL: I would not anticipate there being
any breakthroughs tomorrow on any of the particular trade issues. I
will say that both sides have engaged in discussions in all of these
areas.

We, for our part, would very much like to see some of these
longstanding issues resolved. We have, for our part, endorsed the
Caribbean proposals to end the bananas dispute, and we would very much
like to see the commission come around on that. In the area of beef, we
have put forward a number of proposals that we think are quite
constructive and really put the choice into consumers' hands, allowing
them to choose what kind of beef they want to buy. That hasn't worked.
So, as you know, we're a little bit -- we would like to see these
disputes resolved, and we would also like to make progress on the FSC
case. We put a proposal on the table which we deemed to be WTO
consistent, both in law and in fact, and have made clear that this is a
framework on which we would want to entertain discussions with the
European Union.

Their response on that has not been as forthcoming as we would have
liked.

Q How likely will you see the new sanctions mentioned last
Friday, new sanctions against European products in the beef and banana
disputes?

SENIOR ADMINISTRATION OFFICIAL: I presume that you're talking
about the carousel -- the implementation of the carousel provision and
the most recent trade legislation. There, it's not new sanctions, there
is no new retaliation, it is simply implementation of a new law which
requires us to engage in a public comment notice to possibly shift the
retaliation list from one set of products to another periodically. And
we have started that process by publishing a public notice on that. I
don't know whether that issue will come up.

Q Can Briefer Number One shed any light on whether -- can you
elaborate on any impressions the Portuguese may have brought back from
their meeting with Putin, specifically about the NMD, which you
mentioned?

SENIOR ADMINISTRATION OFFICIAL: Two things, I think, worth saying.
First, the Prime Minister said that he found President Putin extremely
well prepared, well briefed, very much into the details of everything
that they discussed, and also very open to talking about every subject
on the broad agenda, and talking about things in a very frank and open
manner. He said he was struck by that.

On national missile defense, suffice it to say that the Russians
expressed concerns about the possible decision to deploy a limited
national missile defense system and about the ABM Treaty, about START
III -- don't want to go into any more detail characterizing it.

The President repeated to Prime Minister Guterres something that,
of course, the Prime Minister knows, which is that the President has not
made a decision on -- if and when he does make a decision, it'll be
based on the criteria that I think you're all familiar with -- the
threat, the feasibility of the technology, the cost and, of course, the
larger impact on arms control. And to that I think it's important to
emphasize that what we've been doing with the Europeans over the last
several months -- particularly in NATO, but also bilaterally -- is to
engage in a very intensive series of consultations and discussions,
focusing on every aspect of this problem. And this is something that
has gone very, very well.

Q Could you tell us whether the Portuguese also expressed
concerns about the deployment of the national missile defense?

SENIOR ADMINISTRATION OFFICIAL: No, the Prime Minister didn't. He
simply relayed what he had heard from President Putin and didn't
otherwise engage in a discussion of the subject.

Q Did he relate --

SENIOR ADMINISTRATION OFFICIAL: That really wasn't the tenor of
the conversation. What he was, I think, trying to do was to convey to
the President what he'd heard from President Putin, not only on national
missile defense, but also on on a host of other subjects -- on the
Balkans, on economic reform, on Chechnya, et cetera.

Q So the Portuguese took no official position on --

SENIOR ADMINISTRATION OFFICIAL: He did not take a position with
the President on it.

Q How long did this discussion last -- the briefing, or
debriefing, if you will, on --

SENIOR ADMINISTRATION OFFICIAL: On Russia?

Q Exactly.

SENIOR ADMINISTRATION OFFICIAL: I didn't have the watch going. I
would say probably somewhere in the vicinity of 10 to 15 minutes; it was
part of their restricted session. They covered a number of things in
that; that was probably about almost half of the session, so 10 or 15
minutes.

Q Would it be accurate to say that what President Putin
expressed to the Prime Minister was consistent with previous Russian
statements? No change? No change?

SENIOR ADMINISTRATION OFFICIAL: Yes. Yes, that's correct.

Q On the trade issue, on the WTO round, or at least starting a
WTO round, I think the European Union has said they want to do it, but
the U.S. is reluctant. Now you're saying the U.S. wants to do it. Why
do we have this discrepancy in the viewpoints?

SENIOR ADMINISTRATION OFFICIAL: In fact, I think that both sides
have expressed their desire to move forward. And, in particular, we
have made some progress in the WTO in recent months. We have made
progress in starting the built-in agenda, the so-called built-in agenda,
which are the discussions on agricultural market opening and agriculture
more generally; and, secondly, on services. Both of those discussions
are now up and running in the WTO.

The other area where we've made progress, working very closely with
the European Union, is to offer expanded market access to the least
developed, in the context of WTO discussions. And so there has been
some progress and we will continue working on issues such as that, even
as we talk about what an agenda for the round might me.

In terms of the agenda for the round, obviously, we have some areas
of priority in common and some areas of priority that differ somewhat.
And the question will be whether we can develop an agenda that is broad
enough and inclusive enough to include the interests of the developing
countries, as well as the major developed economies.

Q On Chechnya, did what the Prime Minister -- heard from
President Putin indicate that there was any change or any softening or
any progress on the Russian position on Chechnya?

SENIOR ADMINISTRATION OFFICIAL: The Prime Minister was struck by
the fact that President Putin seemed to acknowledge to him that there
had to be a political solution to the problem in Chechnya. He noted,
and I believe he's actually stated on this on the record in the press
conference -- I haven't seen the transcript, but that's my understanding
of what happened from the Prime Minister -- he noted, President Putin
noted that some 100 Russian soldiers were soon to go on trial for
alleged war crimes and other atrocities.

He noted his support for an independent inquiry commission. He
also noted his support for an OSCE mission, although he said that there
were technical problems that need to be worked out. So the tenor of
what Guterres heard from President Putin was, as he described it, Putin
being quite open about the problems in Chechnya and the need to find a
political solution while, of course, strongly defending Russia's
position on what it was doing and why it was doing it.

Q On the discussions on Africa, was there any talk about the
role of diamonds in fomenting conflict?

SENIOR ADMINISTRATION OFFICIAL: Yes. There was a discussion both
with President Sampaio and with Prime Minister Gutterres. They
discussed the need to curb the illegal diamond trade. They discussed
the fact that this trade was helping, in effect, to fund and fuel some
of these conflicts, much the way narco trafficking in different parts of
the world was helping to fuel conflict there. And there was an
agreement on the need to look hard at what could be done to better curb
this illegal trade.

Q What exactly is this AIDS initiative --

SENIOR ADMINISTRATION OFFICIAL: Earlier this year, the
administration announced their intention to intensify efforts using a
four-pronged approach. One is an expanded bilateral funding of research
into these diseases for which no vaccines yet exist. And so there is a
substantial doubling, I believe, of our funds.

Second was a contribution to GAVI, the Global Alliance for Vaccines
and Immunizations. So we have pledged to try to donate $50 million to
GAVI. Again, there, the intention is to ensure that existing vaccines
are distributed broadly to those most in need.

Third, that we would work to develop a private sector incentive to
give the private sector greater financial reward for engaging in
research towards the development of new vaccines for these diseases,
because the diseases disproportionately afflict those least able to pay
for vaccines and so there is not a sufficient market incentive.

And the fourth area is to work with developing countries such as
Uganda, for instance, where the political commitment of the national
government has made all the difference in turning around the infection
rate.

And that kind of a framework is one that I believe the E.U. is also
very comfortable moving forward on and we have worked to develop a joint
initiative in this area. Similarly, the Japanese, as hosts of the G-8,
have expressed a lot of interest in tackling this critical problem,
which is both an economic problem for many African countries and a
health problem.

Q Is there a number on the joint initiative? Is there a dollar
figure?

SENIOR ADMINISTRATION OFFICIAL: There is no new dollar figure on
the U.S.-E.U. discussions. But I believe through this initiative,
through discussions at the G-8 and more generally, we will begin to see
a little bit of a snowball effect in terms of the industrialized
governments putting up money against these goals.

Q Do you expect some sort of joint statement, then, tomorrow,
saying we're going to bring this unified approach to the G-8 and
hopefully get the rest of the G-8 nations to sign on it?

SENIOR ADMINISTRATION OFFICIAL: I do expect there to be some kind
of a joint statement of the aims on this. I don't think it will be G-8
focused; it's U.S.-E.U. focused.

Q Back on Chechnya for a moment. What is the United States'
assessment of what Mr. Putin said in Moscow? Does this represent
progress or --

SENIOR ADMINISTRATION OFFICIAL: Let me defer on that to later
briefers. I don't want to characterize it, I just wanted to really
convey what was said, but not -- thanks.

Q The President made a reference in his opening remarks today to
stability in the Balkans. What exactly will he be telling the E.U.
people tomorrow that needs to be done there?

SENIOR ADMINISTRATION OFFICIAL: Well, I think a number of things.
First of all, and most broadly, a need to continue to move forward on
the stability pact. There was a very encouraging donors' conference
recently, where a number of commitments were made to quick start
projects. These are projects that would really bring a tangible
difference quickly into people's lives.

I think one of the things the President will focus on is the need
to actually quickly start these quick start projects and get the funding
there, so that they can move forward and so that people can really begin
to feel a change in their day-to-day lives. That's for the region more
broadly.

More specifically, and more focused on other areas -- in Kosovo --
no doubt he will talk about the need to sustain our commitment there,
the Europeans sustain their commitment. I think he will point to the
strong improvement in burden sharing in Kosovo that we've seen in recent
months. He'll also talk about the need to fully fund the activities of
the U.N. mission there. We've done better on that, but there is still
a budget shortfall that will need to be made up; and also to get more
police into the region, to get more judges, civil administrators, et
cetera.

Finally, I suspect he will talk about the need to keep sanctions
strongly in place against Serbia and to continue to isolate Mr.
Milosevic, restate his conviction. But, ultimately, we won't see a
democratic Serbia until there is a change in the government in Serbia.

Q For the past two weeks, European leaders have been engaged

MR. CROWLEY: We'll make this the last question, I think the
President is about to speak. He is speaking? All right. We'll cut it
off at this point.